The International Monetary Fund (IMF) has advised the
Nigeria government to remove fuel subsidy and direct the money to the
provision of social amenities for the country.

Christine Lagarde, Managing Director of IMF

Christine Lagarde, Managing Director of IMF, gave the advice during a
press conference at the ongoing joint annual spring meetings with the
World Bank in Washington DC.

Lagarde stated that with the low revenue the country is generating,
removal of fuel subsidy would enable it to have enough funds to provide
the social needs of the people.

Lagarde said: “I will give you the general principle. For various
reasons and as a general principle, we believe that removing fossil fuel
subsidies is the right way to go. If you look at our numbers from 2015,
it is no less than about $5.2tn that is spent on fuel subsidies and the
consequences thereof. And the Fiscal Affairs Department has actually
identified how much would have been saved fiscally but also in terms of
human lives if there had been the right price on carbon emission as of
2015. Numbers are quite staggering.

“I would add as a footnote as far as Nigeria is concerned that, with
the low revenue mobilisation that exists in the country in terms of tax
to GDP, Nigeria is amongst the lowest. A real effort has to be done in
order to maintain a good public finance situation for the country. And
in order to direct investment towards health, education, and
infrastructure.

“If that was to happen, then there would be more public spending
available to build hospitals, to build roads, to build schools, and to
support education and health for the people."

She added that the continuous payment of fuel subsidy could lead to a lack of social protection safety net for the people.

“Now, how this is done is the more complicated path because there has
to be a social protection safety net that is in place so that the most
exposed in the population do not take the brunt of the removal of
subsidies principle. So that is the position we take.”